Wed February 8, 2012

To Get Bailout, Greece Must Reduce Minimum Wage

The deal Greek officials are working on includes several more painful concessions. Among them, reducing the minimum wage.

Joanna Kakissis reports from Athens on how strong unions secured those wages and why some economists say those guarantees have to go.

JOANNA KAKISSIS, BYLINE: The minimum wage in Greece is about one $1,000 a month before taxes. International lenders say it must be reduced to about $780 a month to make the Greek economy more competitive.

ANTIGONE LYMBERAKI: This is something that does not happen anywhere in the world. From Malawi to China to Sweden, the employers are always interested in the labor costs. Only Greek employers appear to be completely indifferent.

KAKISSIS: They're indifferent, she says, because the government provided cheap loans and shut out competitors. Wages increased but productivity declined. That actually hurts those who aren't protected by unions or political connections.

LYMBERAKI: The poor unemployed, the people who work in precarious conditions, the outsiders who try to make ends meet - they do not have a voice in this.

KAKISSIS: But they, like Greece, need jobs too, Lymberaki says. And without the wage change, the country's economy faces more hardship.